Fashion braces for more layoffs as brands rightsize teams

In the fashion industry, companies are currently trying to rebuild the right teams. Karen Harvey, founder of a consulting and advisory firm that finds talent for clients such as Adidas, Calvin Klein and Coach, said: “Two things are happening right now. Economically, it is imperative to reduce the workforce, but at the same time it is imperative to innovate and focus on previously unfocused areas. [such as the physical retail experience]”As companies near the end of the fiscal year and start evaluating their workforce, certain roles and teams may seem redundant.”

“Many of these companies benefited from a time when people were working from home and doing more online, but now that consumers are more on the go, people are more physical. We are waking up again in terms of wanting to be physically involved and shopping in the environment,” she continued, adding that these companies are likely to invest more in the physical side of their business. . Overall, she expects hiring to slow as companies become more cautious and rethink their hiring practices.

Luxury is more resilient, says Paul Christian Bassett, founder and CEO of Christian Bassett, an executive search consultancy for LVMH, Prada, Bottega Veneta, Burberry and more. “I haven’t seen the level of job cuts in the luxury sector compared to the technology sector or anything else,” he says.

Focus on growth drivers

What is unfolding is a revision to the initial forecast, according to eponymous Christie Hart, a fashion and luxury-focused recruitment consultancy, and The, a networking community for brand professionals. “Business was booming, and executives were predicting a massive increase in hiring to accommodate the enormous growth,” she says. Brands are now aggressively cutting costs to maintain profits. “This kind of deliberate decision-making feels more strategic than necessary at this point,” she claims.

After the pandemic’s e-commerce boom, fashion retailers are more aware than ever that online is not the “silver bullet” it once thought, analyst Hyman said. “People thought that if they traded online, they would pay less rent and make more money,” he says. “The reality is that the returns are high and they eat into your profits. [by] Selling online. “

Hyman warns that corporate restructuring “represents costs too high and earnings too weak… investment cuts are often a sign of distress.” However, other analysts such as Streeter, in some cases, see it as a way to create an effective business model by streamlining the business, keeping costs low, and focusing on areas that are the company’s growth drivers. claims to be

Growth in areas such as clienteling could also be a catalyst for new job creation, Hart said. “These companies are investing in new categories because they feel they can drive growth in these new areas of business, and as a result are hiring entirely new teams to support their businesses. ”

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